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Setting up a self-employed pension

When you become self-employed either running a business or a money-making blog there are a few additional pieces of admin that need to be taken care of besides accounting and Self-Assessment Tax Returns. We’re talking about your pension being one of them. A self-employed pension is really important, especially later on in life.

As you are your own employer you really should be making regular contributions to a pension pot. You can choose how much you wish to invest monthly and con top-up a set amount each month. Alternatively, you can pay in based on your business’ monthly performance. It is a really good idea to get into the habit of paying into your pension monthly irrespective of the value as initially as a start-up you may not be generating that much revenue.

The Government helps those with a self-employed pension

If you save into a pension specific ISA or savings account the Government will add another 25% on top of your contribution (if you earn under £40,000pa). So, for example, you invest £100 into your pension pot, the Government will top it up by an extra £25. Plus interest is added on top of this in some instances. This is solely dependant upon where your pension is being paid into as how much interest you receive. The more you put away now, the more you’ll have when you retire as this pot will be accruing money on top of the money you put away.

The current state pension is £8,767 a year. This is the maximum that the Government will give you. And the majority of people agree that this is not enough so require an additional source of income after they stop working, and that’s why a pension is the most common and tax-efficient way to do this. That’s why it’s so important, regardless of what stage your business is at to set aside a proportion of your earnings to ensure that you can live better later in life. 

Once you turn 55, you are able to convert whatever you have set aside into your pension fund during your working years into an annual income for the rest of your life. 

Here at ELLEfluence, we’ve partnered with Penfold, an FCA regulated organisation which specialise in digital pensions. You can get £25 FREE to start your self-employed pension off when you make your first deposit (as little as £1).

They safely invest your money in bonds and shares and reward you with more money, known as Einstein Money. Similar to big banks and building societies, apart from your reward will be better simply because they don’t have the same amount of overheads as big corporations do. 

With a Penfold pension, it is invested in a special plan provided by BlackRock, the world’s largest investment manager, who would continue to invest your pension if they ceased to exist. So, therefore, your money is safe. You can find out more about Penfold Pensions and see if they’re right for you here.

With Penfold, you can select the level of investment you wish to make too, there are 3 levels and depending on how far away you are from turning 55 and being able to access your pension you can choose the longevity and speed of your investment. For example, Laura’s pension is Level 3 invested as she has over 15 years until she turns 55 and wants to maximise her self-employed pension opportunity to return the maximum amount possible.

It is worth noting though, with all investments capital can go up or down. For full advice please see a financial advisor.

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Setting up a self-employed pension with Penfold | ELLEfluence Business Training Academy

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